Wanted - Universally accepted E Currency on the Web

As we approach the festive season, all of us get into human kind's greatest obsession - shopping! Over the past decade, online shopping has come to generate big bucks for businesses. So much so, that 'clicks' are beating 'bricks' by a wide margin in many countries.
While I browse through the various online shopping malls - a thought often hits me - why can't someone enable a common 'bridge' for shopping online? Why is everything designated in currency?
What I mean here is - how do use my airmiles to shop online? I would really love to use my cards membership reward points ON THE WEB for shopping - without the constraints of redemption of vouchers at the 'tie ups'.
I think there is a huge opportunity here for the likes of Pay Pal, Google or even a Mobile phone operator. Offer a 'clearing house' where the world can come and 'convert' their reward points, air miles, membership points and even mobile air time; into units of E currency that translates to purchase of goods and services.
There are some examples of such online usage - American Express in the US allows cardmembers to use their MR points to book hotel rooms and travel tickets at participating outlets. A MSP in Kenya allows its subscribers to transact using their 'airtime' as currency. But these need to be extended to the wide world outside their closed loop.
So, here's the opportunity - use all your accumulated non-financial points/miles/rewards online to shop. It works to the benefit of all parties - the points issuer gets more 'burn' of points, the consumer has more purchasing power, the online malls get more business. Also, such transactions are likely to be more secure than credit/debit card usage online. Whoever heard of sharks stealing 'airmiles'!!
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PS: I see a lot of studies outling business opportunities in mega billions. For e.g. a latest study by a consulting firm claims that the global P2P opportunity by 2012 is 158 B US dollars. Now, I have been seeing a whole of these projections on Chip card usage, online banking, NFC, Mobile banking. The common thread is the big potential opportunity sized up in Billions at a point of time in future. I would really like to know if anyone is tracking these grandoise projections reports. Does anyone evaluate whether these Billion dollar projections actually pan out??

Selling Anywhere.com -Web 2.0 is here!

I chanced to see a seemingly innocuous news item on PayPal launching a Beta version of its Store Widget- http://storefront.paypallabs.com/. I am not sure if the Cards and Payments industry is cognizant of the potential implications of the success of this offering!
Ok, how does an online store operate today (I am including the likes of EBay)?
The store has portal hosting the items (goods and services) for sale. Buyers go the store website, use their payment mechanism - cards, PayPal, ACH, etc- and complete the sale. Now, in one stroke, PayPal promises to remove the 'online real estate' requirement! If you want to sell your stuff, don't have to go to E Bay; just host a blog or an url and peddle your wares!
Why should payment providers and Acquiring banks watch this carefully?
Simple answer: if you and I can host a 'store' without requiring an Acquirer / Host, then why should the Merchants of the world bother to use an Acquirer.
While I see the 'geek's glee' on the launch (see the PayPal blog -http://www.thepaypalblog.com/weblog/2007/12/the-paypal-stor.html), this must make the card payment giants - Visa, MasterCard and American Express - to sit up and take notice. If it is so easy to accept payments anywhere on the Web, then this can be a huge differentiator for the PayPals and Googles of the world. Moreover, what stops the Mobile Providers from hitching on to the bandwagon -(e.g. use your mobile number and pay me here.....!). Worse still, what if this is somehow extended to the real world in some form through mobile phones?
Thus far, all such 'revolutions' in the payments world have shown more likeness to Budapest 1956 than Berlin 1989! But then, we are so close to Web 2.0, it may be with you sooner than you think!
P.S: Been watching with great amusement on the Citigroup CEO hunt. The candidates have ranged from the obvious (Gary Crittenden) to the wildest cards - there are notes flying across the Net on Shaukat Aziz (ex-Citibank Executive -PM of Pakistan)! Guess the bookies should now allow Citi shareholders and employees to place their bets against odds. Gives them a bit of a chance to recover their losses!

Mobile numbers as Citizen IDs - the next generation!

One of the biggest issues for a bank in any country is the issue of identification of an individual. Most countries don't have a social security ID or a voter's ID (well, in a lot of countries you don't get to vote!) that a banker or any other authority can use to identify its customers. How does the banker know it is dealing with Mr or Ms XYZ and continue its relationship with the customer?
Well, I have an answer - formalize the MOBILE number and use it as Citizen ID! We all know that mobile phone penetration is the biggest story of 2007. For e.g. India added 52 million NEW mobile connections in October! China and Russia also continue to add new connections that exceed the population of a lot of countries. So, what can we do - simply ride on the mobile telephony structure and use mobile numbers for identification. Of course, to get around issues like change in owner, selling your connection needs to be addressed. But governments can simply pass regulations to treat the mobile number and its issuance to run like a Citizen Id system. Not only will this save the governments the huge cost of putting a citizen ID system in place but also ensure that citizens always carry their ID with them! The SIM card is already a secure Chip ; so the security side is taken care of. The bureacrats may turn around and say - why should we use something not created by the State? My response would be; in this age of outsourcing and public-private partnership, it is time for governments to wake up and take off the blinkers.
So, bankers and MSP operators; go for it - promote your mobile numbers as a secure citizen ID. It is safe, secure and also a great social equalizer!! Despite what the Dan Browns of the world may say; your number is no different from my number!.
Mobile phones can be the tipping point of reaching out the 'next billion' unbanked mass.
Prima facie, I am sure we all agree that riding on an existing infrastructure is much better alternative than trying to start from scratch. There is also the serendipity factor - many good things will happen as we go along!
Now on to the brasstacks of using a mobile number for ID purposes.
1) Governments in the countries need to pass a central regulation or law that lays down the mobile number logic and the fact of its being unique to an individual. This way, mobile numbers will not be resuable and MSPs will be required to maintain a method in their number allocation. A comprehensive regulation will need to be passed that covers the entire gamut of credit lending and mobile phone maintainence. This would not only set a railroad but also lend solid credibility.The laws should cover prepaid and postpaid connections - what matters is the number to be attached uniquely to an individual.
2), MSPs will need a 'carrot and stick' approach to get down to issuing mobile phones across the countryside. Ideally, State and Federal governments should subsidize the cost of the mobile instrument and the line costs. I can imagine the MSPs salivating at the prospect of issuing a few hundred million more connections!
3) MSPs will deploy armies of sales persons to reach out to the masses. Where there is an opportunity, the MSPs will lose no time in deploying their resources! The Sales force can also take digital photos of the individuals and even look a simple fingerprint storage technology. In fact, the first line of credit given out can be the phone instrument!
4) Mobile phone owners will happily go for the phone connections when they realize the benefits it offers - credit, identity and most importantly -obviating any middle men (e.g. bureacrats) and any chances of corrupt practices. Credit coming directly onto your phone in the form of electronic money provides no chance for any leakage or skimming. Any subsidies or state benefits should be paid directly to the mobile number; no question of any hanky panky.
5) MSPs will have the flexibility to price their services according to the volumes and area of operation. Since countries like India, China, Russia started off on a GMS platform, the more volumes coming in - the better the revenue / price equation.
6) How do the debtors get cash out of their 'mobile credit'? The answer lies in reaching out to the entity that is closest to the debtor. For example, in India, Post offices exist in almost every district and town - a historical legacy of the British Rule. Electronic cash dispensers (EPOS) with chip readers that can read the chip on the mobile phone will provide the solution. Fingerprint identification should easily enable operation. A live example of mobile phones as a payment option can be seen from South Korea where 'dongles' enable cardholders to use their mobile phones as credit cards. Even for repayment of instalments on the loan, these can act as payment points.
7) Credit grantors will have reference points of : designated mobile number, location, physical verification by the MSP, readily available contact and GSM tracking!
8) From an environmental point of view as well; this presents opportunities. In emerging markets, there are more used mobile phone instruments sold than new ones. As the mobile phones assume stature, there will be more effective use of instruments by pushing it down the food chain. Opportunties for solar cell powered mobile phones will automatically become a necessity.
9) Citizens will also use their mobile phones to send funds to each other - the great P2P opportunity that is yet to see the light of day may become a reality. This is already in vogue in Phillipines where citizens can send money to/from any mobile number in the country.
I am sure MSPs and credit grantors can think of many more opportunities and benefits.
So, I will now wind up my act and hope this subject gets the attention of the right people who matter! The mobiSomething creative has to be implemented; or else for the huge mass of underbanked and underserved opportunity, 'the road to prosperity may remain under construction'.

Getting the next billion!!!

Getting the next Billion!
Just the other day, I was reading a series of reports by Boston Consulting Report (BCG). Normally, such reports use statistics like a drunk using a lamp-post - for support than illumination. But these reports are an exception! The report on India particularly fascinated me. According to BCG, the next big opportunity for banks is the 'billion ' unbanked customers in countries like China, India, Brazil and of course Africa. India alone has more than 135 million housholds that are outside the purview of the banking sector. Thus far, there has been no real effort to reach out to this segment as a profitable segment. They have always been patronised and the banks have been condescending than anything else. But now with the changed scenario and 'sub prime' wallop, banks have to review their outlook towards the massive unbanked.The report provides some ideas on how to reach out to these 135 million households. From my take, there are two solid routes - 1) use the social hierarchy 2) Mobile phone infrastructure.What do I mean by socal hierarchy - it is the village headman, local leaders to whom this unbanked normally goes for favors and help. Imagine if each village's panchayat or mukhia turns into a sales agent for a bank. The agent can also have an element of responsibility for the repayment. Now, the mobile phone network is growing at a breakneck pace across India. When you have more than 50 million new connections across the country, surely it is big enough for us to take notice. We can all learn from the Phillipines example; use the mobile phone to send money, operate your bank account, your credit is always with you on the phone and secure on a SIM card chip. The biggest historical issue for a low income Indian is the treatment meted out to him by a banker who looks and talks down to him. Contrast that when he doesn't have to go to a bank and has more trust when he has his money in electronic form always with him! Each village can have a mobile training centre where people help those who need to operate.Think about it; win win scenario for all - banks, mobile operators, governments and also the huge mass of unbanked!

Getting the next Billion!

Just the other day, I was reading a series of reports by Boston Consulting Report (BCG). Normally, such reports use statistics like a drunk using a lamp-post - for support than illumination. But these reports are an exception! The report on India particularly fascinated me. According to BCG, the next big opportunity for banks is the 'billion ' unbanked customers in countries like China, India, Brazil and of course Africa. India alone has more than 135 million housholds that are outside the purview of the banking sector. Thus far, there has been no real effort to reach out to this segment as a profitable segment. They have always been patronised and the banks have been condescending than anything else. But now with the changed scenario and 'sub prime' wallop, banks have to review their outlook towards the massive unbanked.
The report provides some ideas on how to reach out to these 135 million households. From my take, there are two solid routes - 1) use the social hierarchy 2) Mobile phone infrastructure.
What do I mean by socal hierarchy - it is the village headman, local leaders to whom this unbanked normally goes for favors and help. Imagine if each village's panchayat or mukhia turns into a sales agent for a bank. The agent can also have an element of responsibility for the repayment. Now, the mobile phone network is growing at a breakneck pace across India. When you have more than 50 million new connections across the country, surely it is big enough for us to take notice. We can all learn from the Phillipines example; use the mobile phone to send money, operate your bank account, your credit is always with you on the phone and secure on a SIM card chip. The biggest historical issue for a low income Indian is the treatment meted out to him by a banker who looks and talks down to him. Contrast that when he doesn't have to go to a bank and has more trust when he has his money in electronic form always with him! Each village can have a mobile training centre where people help those who need to operate.
Think about it; win win scenario for all - banks, mobile operators, governments and also the huge mass of unbanked!